Correlation Between Lasertec and Tokyo Electron
Can any of the company-specific risk be diversified away by investing in both Lasertec and Tokyo Electron at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lasertec and Tokyo Electron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lasertec and Tokyo Electron, you can compare the effects of market volatilities on Lasertec and Tokyo Electron and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lasertec with a short position of Tokyo Electron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lasertec and Tokyo Electron.
Diversification Opportunities for Lasertec and Tokyo Electron
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lasertec and Tokyo is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lasertec and Tokyo Electron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyo Electron and Lasertec is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lasertec are associated (or correlated) with Tokyo Electron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyo Electron has no effect on the direction of Lasertec i.e., Lasertec and Tokyo Electron go up and down completely randomly.
Pair Corralation between Lasertec and Tokyo Electron
Assuming the 90 days horizon Lasertec is expected to generate 1.44 times less return on investment than Tokyo Electron. But when comparing it to its historical volatility, Lasertec is 1.41 times less risky than Tokyo Electron. It trades about 0.17 of its potential returns per unit of risk. Tokyo Electron is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 15,114 in Tokyo Electron on November 3, 2024 and sell it today you would earn a total of 2,066 from holding Tokyo Electron or generate 13.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lasertec vs. Tokyo Electron
Performance |
| Timeline |
| Lasertec |
| Tokyo Electron |
Lasertec and Tokyo Electron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lasertec and Tokyo Electron
The main advantage of trading using opposite Lasertec and Tokyo Electron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lasertec position performs unexpectedly, Tokyo Electron can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Tokyo Electron will offset losses from the drop in Tokyo Electron's long position.| Lasertec vs. Sumco Corp ADR | Lasertec vs. Asm Pacific Technology | Lasertec vs. Tokyo Electron | Lasertec vs. Advantest |
| Tokyo Electron vs. Origin Materials | Tokyo Electron vs. Codexis | Tokyo Electron vs. The Mosaic | Tokyo Electron vs. Arrow Electronics |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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